Q AND A ON THE EXTENSION OF RENT CONTROL

. WHAT IS THE LEGAL BASIS FOR EXTENDING RENT CONTROL?

Rent Control under Republic Act 9653 was approved on July 14, 2009 and expired on December 31,
2013. Upon expiration,

the law mandated HUDCC to:

1.1 Continue the regulation of the rental of certain residential units, determine the period of
regulation and its subsequent

extensions, if warranted, determine the residential units covered and adjust the allowable limit
on rental increases per

annum;

1.2 Conduct every three (3) years from the effectivity of the Act, a review of its implementation and
study on rental regulation,

and submit its recommendation

to Congress whether to continue regulating or deregulating; and

1.3 Formulate and implement a two-year transition program, which will provide for safety measures
to cushion the impact in

the event of a regulation-free rental to housing market.

2. WHAT DID HUDCC DO WHEN THE LAW EXPIRED ON DECEMBER 31, 2013?

The HUDC Council issued Resolution No. 2 in December 2013 extending the Rent Control for another
two years at status quo

rates of not more than 7% per annum for:

2.1 Renters in Metro Manila and highly urbanized areas whose monthly rates are P10,000 and below;
and

2.2 Renters in other areas whose monthly rental rates are P5,000 and below,

As long as the unit is occupied by the same lessee.

The Council’s decision was based on the preliminary study of the Philippine Statistical Research and
Training Institute of the

Philippine Statistical Authority, as follows:

2.3 There are about 1.5 million renters nationwide based on the 2012 Family Income and
Expenditure Survey;

2.4 97% of said renters are renting monthly at P10,000 and below.

The status quo was adopted inasmuch as there is a need for further data and validation, such as the
Wholesale Price Index for
construction materials, for a comprehensive study.

3. RENT CONTROL WILL AGAIN EXPIRE ON DECEMBER 31, 2015. WHAT HAS HUDCC DONE ABOUT
THIS?

The HUDC Council issued Resolution No. 1 in June 2015 which extended Rent Control for a period of
another two (2) years -

from 01 January 2016 to 31 December 2017.

4. WHAT UNITS ARE COVERED BY THE RENT CONTROL EXTENSION?

4.1 Scope of Coverage. The Rent Control covers the following residential units nationwide, whose
monthly rent is P10,000

and below:

A. Apartments;

B. Houses and/or land on which another’s dwelling is located and used for residential purposes;
and

C. Buildings or parts thereof, which are being used solely as dwelling units, boarding houses,
dormitories, rooms

and bed spaces.

4.2 Exclusion. As provided in RA 9653, rented units, which are used as motels, motel rooms, hotels,
and hotel rooms

including those used for home industries, retail stores or other business purposes if the owner
thereof and his or her

family actually live therein and use it principally for dwelling purposes are not covered by the Act.

5. WHAT ARE THE NEW RATES OF INCREASE UNDER RENT CONTROL?

The increase in the monthly rental rate of any residential unit shall not be more than:

5.1 Four percent (4%) annually for those paying a monthly rent/ranging from P1.00 to P3,999.00; and

5.2 Seven percent (7%) for those paying a monthly rent of P4,000.00 up to P10,000.00 for as long as
the unit is occupied

by the same lessee.

The respective Housing and Urban Development Committees of both Houses of Congress have
approved/confirmed the

above recommendations.

6. WHY ARE THERE TWO TIERS NOW COMPARED TO RA 9653?

Provide lower rates of increase to low income renters. The subsequent study done by the Philippine
Statistical Research
and Training Institute looked at the census on rental units, prevailing rental rates, monthly inflation rate
on rentals of the

immediately preceding year, and rental price index.

The study showed that out of the 1.5 million renters in the country, 1.27 million (82%) are renting at less
than P4,000 monthly.

With regard to the rate of increase, the study recommended to adopt the inflation rate on rentals of the
immediately preceding

year, which at 2014 was at 4.1%.

Since Rent Control is intended to assist the low income families who are renting, it was decided to lower
the rate of increase to

4% for those renting below P4,000 a month.

But should not disenfranchise those already covered. Since the existing Rent Control covers those who
are renting up to

P10,000, the Council resolved to continue covering them at the existing rate of 7% as provided in RA
9653.

7. WHAT ARE THE OTHER PROVISIONS OF RA 9653 THAT REMAIN EFFECTIVE?

7.1 REQUIRED ADVANCE RENT AND DEPOSIT

Every lessor is allowed to impose not more than one (1) month advance rent and not more than
two (2)

months deposit, which shall be deposited in a bank under the lessor’s account name during the
entire duration of the

lease agreement. Any interest that shall accrue therein shall be returned to the lessee at the
expiration of the lease

contract.

7.2 FORFEITURE OF DEPOSITS

The lessor has the right to forfeit a portion or all of the one month deposit including the interest
earned in the event the

lessee is unable to settle rent, electric, telephone, water or such other utility bills or destroys any
house components and

accessories.

7.3 GROUNDS FOR JUDICIAL EJECTMENT

The lessor has the right to eject the lessee on the following grounds:

A. The lessee assigns the lease or sub-leases the unit, without the written consent of the owner/lessor;

B. The renter has accumulated arrears in rental equivalent to three (3) months;
C. After the expiration of the lease period, the lessor/owner has a legitimate need to repossess the
property for his/her

own use or that of his/her family as a residential unit, provided that the renter was notified three
months in advance;

D. The lessor/owner needs to make necessary repairs on the leased premises which is the subject of an
existing order

of condemnation by appropriate authorities concerned in order to make the premises safe and
habitable; and

E. The lease contract has expired.

The lessee cannot be ejected on the ground that the leased premises have been sold or mortgaged to
a third

person regardless of whether the lease or mortgage is registered or not.

7.4 PENALTIES FOR VIOLATION OF ANY PROVISIONS OF THE RENT CONTROL ACT

Any person found guilty of violating any provision of the act shall be fined of not less Twenty Five
Thousand Pesos

(P25,000) nor more than Fifty Thousand Pesos (P50,000) or imprisonment of not less than one (1) month
and one (1)

day to not more than six (6) months, or both.